South Korea to Introduce Blockchain-Based Tokens for Public Expenditure in Q4

The South Korean Ministry of Economy and Finance is set to launch a trial of blockchain-based deposit tokens for government expenditure in the fourth quarter, as part of a larger effort to modernize public fund management. According to local reports, the ministry has received approval for the pilot under the 2026 regulatory sandbox program, allowing it to use digital currency for Treasury fund expenditures. The approval enables the use of tokenized deposits for business promotion expenses, which are currently processed using government purchasing cards. This change marks a significant shift from the traditional system governed by the Treasury Funds Management Act, which previously required card-based payments. In the sandbox environment, agencies will be able to test new methods outside of these rules on a limited basis. Officials anticipate that this change will enhance oversight, as token-based payments can be programmed with predefined conditions such as spending limits and industry-specific usage. This could reduce the need for manual audits, particularly for spending that occurs outside standard hours. The new system also eliminates intermediaries like card networks, which could lead to lower transaction fees for small businesses receiving government payments, according to the ministry. This is the second instance of deposit tokens being used in Treasury operations, following an earlier pilot related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City after a selection process for participating firms, with plans to expand the program if it demonstrates improved spending control and measurable cost savings.